Contact the U.S. Department of Education and ask about setting up monthly payments. They are willing to negotiate reasonable payments that work best for you.
Pay your monthly balance within 20 days of the due date at least 9 times in a consecutive 10-month period. Depending on the lender you speak to, the payment period may differ.
Contact your lender about the Loan Rehabilitation Program. Ask if you qualify and how to apply.
Negotiate a minimum principle and interest balance to enter the program. This amount must be present after the 10 months of consecutive payments.
Continue to pay monthly loan payments while waiting to hear if you qualify for the program. Not only will this keep you from defaulting again, but it will help you get into the habit of making the payments on time.
Complete the Loan Rehabilitation Program and be on your way to erasing your default from your credit report. Continue to make all payments on time (credit card, loan, etc.) to avoid more damage to your credit report.